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Celluloid hopes mean more to Tesla than earnings

21 Oct 2011

The $2.8 bln firm makes pure electric cars, but it’s valued as a hybrid. Sure, quarterly numbers hint at its ability to hit manufacturing targets. But Silicon Valley-style growth is central to the story. Tesla will be hoping a new documentary helps electric cars catch on.

Groupon’s "first mover advantage" probably isn’t

21 Oct 2011

Burning huge sums of cash to get ahead of rivals can work - look at Amazon. Groupon thinks a bit more capital can cement its position atop the Internet coupon heap. But this strategy works when it creates costly barriers to entry - which Groupon shows little evidence of doing.

Imagine if Merrill had been smart like Goldman

13 Oct 2011

That’s the basic conceit behind the latest film to emerge in the financial crisis genre, “Margin Call.” Kevin Spacey stars as the head of a desk overloaded with MBS about to blow that his boss forces him to unload to unwitting buyers. It’s simplistic, but eerily familiar.

Occupy Wall Street may share fate of Coxey’s Army

12 Oct 2011

Like today’s demonstrators, Coxey’s 1894 march on Washington followed a period of deflation that increased inequality and a financial crash. Coxey failed, but his demands for stimulus spending and printing money became the standard response to recession. OWS should be so lucky.

Richard Li’s financial alchemy fails to wow

12 Oct 2011

The HK tycoon’s plan to spin off his telecoms business into an innovative trust structure is designed to unwind PCCW’s huge conglomerate discount, while preserving his control. The cost is unnecessary complexity, and potential dilution of minority shareholders.

Embattled Wall Street should prepare for worse

11 Oct 2011

Bankers are already on the defensive. Third-quarter earnings look set to be shoddy. Another 10,000 job cuts may be in the offing. And protesters are ready to camp outside Jamie Dimon’s house. Yet financials have grown as a share of GDP since 2006, suggesting more pain is to come.

Will Wells Fargo get hooked on Wall Street crack?

10 Oct 2011

The California-based lender has mostly resisted lower Manhattan’s siren call. New rules would make it even costlier. But Wells kept Wachovia’s investment bank and is hiring. Ailing Morgan Stanley could even be a good fit. But such temptation can become a debilitating addiction.

Oil trader, stock investor variance is opportunity

10 Oct 2011

Economic fear has taken a heavier toll on U.S. oil company shares than on crude itself. Either there are bargains among the stocks of oil explorers, or commodity investors are too bullish. The difference of opinion ought to mean there’s room to make money.

Dexia rescue riskier than it looks for Belgium

10 Oct 2011

After a weekend of wrangling, Belgium is to nationalise the domestic arm of the Franco-Belgian bank. The direct cost will only be about 1 pct of GDP. But lots of loose ends remain around Dexia’s funding guarantees and solvency. The true cost may end up being a lot higher.

Del Monte settlement quantifies cost of conflicts

6 Oct 2011

Barclays will surrender a big slug of fees from the $5.3 bln buyout, where it advised the seller and financed the buyer, KKR. Wall Street read the writing on the wall after a judge’s slap. But when banks get spanked on the bottom line, the message resonates loud and clear.

ECB tries to wriggle out of euro vortex

6 Oct 2011

Modest help for banks and stable rates will not free the central bank from the forces buffeting it: euro zone government inadequacies, market excesses and legal pressure. But the ECB is doing what it can in the group effort to muddle through the crisis. It might even work.

Jobs, no ordinary CEO, leaves no ordinary company

6 Oct 2011

The force behind the iPod, iPhone and iPad not only created and then rescued Apple, building it into the most valuable tech company on the planet. He also changed the way people live. It’s a rare entrepreneur who leaves that legacy – and a company that can thrive without him.

Bank debt confusion makes an unwelcome comeback

5 Oct 2011

Widening spreads on banks’ own bonds are set to flatter earnings this quarter, just as in the 2008 meltdown. The gain is ignored by regulators, and will reverse when yields tighten. But inconsistent and selective reporting makes it harder for investors to filter out the noise.

A manifesto for Occupy Wall Street

5 Oct 2011

The wannabe protest movement has only vague complaints. “A feeling of mass injustice” may be understandable, but it doesn’t bring crunchy soundbites to match the Tea Party’s “taxed enough already.” Breakingviews offers a more sharply defined, if partial, set of objectives.

iPhone 4S unleashes more creative destruction

4 Oct 2011

The latest version of the smartphone offers faster data processing and downloads, as well as voice-powered software. Apple investors and gadget fans might have wanted more. But companies ranging from Research In Motion to American Greetings probably hoped for less.

U.S debt jubilee would not rev up growth

4 Oct 2011

A one-time massive loan write-off might give consumers confidence, but would reward bad behavior and kill market trust. Besides, the Fed would end up printing money to rescue lenders. High inflation is a less pernicious way to erode debts, but just taking losses is best of all.

HP would make lucrative Oracle target

3 Oct 2011

A selloff has left HP vulnerable, possibly even to Larry Ellison’s firm. HP is cheap, despite its pricey deal for Autonomy. Even paying a 40 percent premium, Oracle could reap a hefty 16 percent return on investment, a Breakingviews analysis suggests. And that’s before any cost savings.

New Morgan Stanley woe is a drama lacking a crisis

3 Oct 2011

The Wall Street firm was facing skepticism about its turnaround even before the third quarter turned crummy. Its latest misery, though, is driven not by substance but by numerical confusion. It should pass – unless the fear driving the herd mentality turns into outright panic.

Blocking a deal isn’t always best antitrust answer

30 Sep 2011

When Live Nation merged with TicketMaster, the prognosis for competition in the live music and ticketing business wasn’t good. Concessions extracted by U.S. regulators seemed bitty. But nearly two years on, rivals are flourishing. Live Nation doesn’t look so dominant any more.

U.S. government has chance to borrow very long

30 Sep 2011

Thanks to the Fed’s maneuvers, Uncle Sam could sell bonds maturing decades from now at uncommonly low yields. Moreover, pension funds need the paper. The Treasury has kicked around the idea of 50 or 100-year bonds before. Maybe it’s time to actually issue some.